Survival Strategies for Local Journalism

In an attempt to draw readers and advertisers, the San Francisco Chronicle began printing on high-quality glossy paper in November, 2009. Its circulation had dropped by more than fifty per cent in less than a decade.Credit PHOTOGRAPH BY JUSTIN SULLIVAN/GETTY

In October, the San Francisco Bay Guardian, a forty-eight-year-old alternative newsweekly that was beloved among San Francisco progressives, announced suddenly on its Web site that its next issue would be its last. Glenn Zuehls, the publisher of the paper’s corporate parent, the San Francisco Media Company, told me at the time that the Guardian, which relied on advertising for revenue, wasn’t profitable. The seven members of the newspaper’s editorial staff met at Muddy Waters, a coffee shop on Valencia Street, to discuss what they might each do next, but no one had any great ideas; the local-news business wasn’t exactly thriving. Marke Bieschke, the executive editor, had the idea of producing a handmade zine, though he doubted it would make any money. Steven T. Jones, the paper’s editor, thought he would take a couple of months off and maybe spend some time riding his bike around. Others planned to look for different jobs—maybe in other industries altogether.

But old habits die hard. On Wednesday, Jones published the first of what will be a series of Guardian-style columns, on a new platform called Byline that facilitates crowd-funded reportage—a Kickstarter for journalism—by letting people give online contributions to help fund the reporting and writing of a particular piece or an ongoing feature. Jones said that he has spoken with other former Guardian staffers who might also participate; Byline hopes, through Jones’s project, to encourage something of a revival of the spirit of the Guardian. Bieschke, meanwhile, is preparing to join 48 Hills, a nonprofit local-reporting venture, created by a former Guardian editor named Tim Redmond, that aims to produce the kind of investigative, public-interest journalism for which the Guardian was once famous. The publication is more than a year old, with an annual budget of more than a hundred thousand dollars and some name recognition among local newshounds, and Redmond is looking to expand it.

The ventures come at another difficult moment for local journalism in San Francisco, and an equally challenging time elsewhere. Last week, the Bold Italic, a popular blog about Bay Area culture, was shut down, with a short, unsigned message on the Bold Italic, reading, “We have made the difficult decision to cease operations.” (A spokesman for the Gannett Company, the site’s publisher, declined further comment.) The San Francisco Chronicle has also faced financial challenges, as have the city’s other long-established papers. The Bay Area isn’t, of course, the only place where local journalism is suffering. It seems that every month, anotherdailyorweeklypaper is shuttering, and at this point each new development is as unsurprising as it is troubling. People seem to be in agreement both that local journalism serves an important democratic purpose and that it is—at least in its current form—doomed.

One lesson from the closures and stresses has been that advertising alone can’t sustain local news endeavors, even Web-only ones, whose costs are lower than those of traditional papers. Online advertising revenue tends to be based on the number of times a given Web page is seen, and municipalities—even cities as large as San Francisco—provide too few page views to bring in enough revenue to sustain good journalism. “The old advertiser model could be a part of the mix, but having seen the problems we had at the Guardian and in the broader news industry, simply relying on display advertising might not get you all the way to where you need to be to be a sustainable news organization,” Jones, the former Guardian editor, told me. Others in the local-news business with whom I spoke echoed the sentiment.

The awareness that advertising alone is not a sustainable model for local news has led some companies and nonprofits to look at other approaches. The Knight Foundation, which has helped to fund nonprofit local-journalism initiatives, last week published the third installment in a series of reports, begun in 2011, on how outfits focussed on particular cities or states have progressed toward being financially sustainable. (The Knight Foundation has funded many of them.) This year’s report contains some fascinating details, including the 2013 budgets of the twenty outfits the foundation studied. Their spending that year ranged from thirty-four thousand dollars (the Rapidian, of Grand Rapids, Michigan, which launched in 2009 and had three employees) to more than seven million dollars (the Texas Tribune, started in 2009, which covers the state of Texas and employed forty-two people). Seventeen of the twenty publications had budgets of less than a million dollars.

The report puts one of its most important findings in blunt terms: “Nonprofits remain very reliant on foundation funding, and few appear to be rapidly approaching a sustainable business model”—that is, one that would allow the publication to live on without grants. To be specific, the news organizations received, on average, about fifty-eight per cent of their revenue from foundation and other grant funding. Earned income (from sources like advertising, corporate sponsorship, syndication of stories in other outlets, and sponsored in-person events) made up twenty-three per cent, while individual donations or membership fees comprised nineteen per cent. Jonathan Sotsky, the director of strategy and assessment at the Knight Foundation, told me, “A lot of these sites are started by former journalists, so they’re so focussed on editorial.” By “editorial,” Sotsky was referring to the published material, rather than the revenue model that sustains the publication. “The problem is that you can put up great content, but if you’re not creating a sustainable business model, you’re not going to have the lights on very long.”

The most successful local-news outfits, from a financial standpoint, Sotsky said, tend to be those that set specific monetary goals in advance. Sites that have experimented with generating new sources of earned income, beyond conventional ones like advertising, have also seen rewards. So have those that have turned from relying on donors to signing up members who get exclusive access to special content and events. Though the report didn’t focus much on crowdfunding of the sort that Byline facilitates—Sotsky said the Knight Foundation hopes to study it in the future—some local publications have had success with it, especially when it has been used in conjunction with other sources of revenue.

The experiences of some news organizations offer another finding about the importance of diversification: bringing in revenue from several sources. The Tyee, an independent, for-profit publication in Vancouver, British Columbia, founded in 2003, wasn’t part of the Knight Foundation’s report, but it provides a fascinating case study in this approach. “I don’t think a single publication in Canada, if they collected all the clicks in Canada, would have the budget that they had when they published on dead trees,” David Beers, the Tyee’s founding editor, told me. Only twenty-five per cent of the Tyee’s annual budget is funded by advertising and sponsorships. About forty-five per cent comes through ongoing investments from Working Enterprises, a labor-union-affiliated investment group, and from a wealthy British Columbian couple. Another twenty-five per cent comes from crowdfunding (recently, the Tyee persuaded supporters to pledge a total of a hundred thousand dollars, annually, so that it could place a reporter in the Canadian capital of Ottawa), and five per cent derives from holding “master classes” taught by Tyee reporters. The money that the Tyee brings in from the labor-affiliated group and the affluent couple are investments, rather than revenue, so it technically operates at a loss, but one can see how its model of diversification, or one like it, might aid a nonprofit news organization in becoming sustainable.

There’s something a bit depressing, on the face of it, about viewing local news—something many of us consider crucial to democracy—through a financial lens. In fact, though, there’s an important relationship between how local-news sites generate revenue and the kind of news they produce in the first place. That the Bold Italic failed while the Tyee has existed for more than a decade—and has won several accolades—gives some insight into this. Beers, who spent several years working in San Francisco journalism circles before moving to Vancouver, offered his impressions of Bold Italic, which, on a recent visit, featured a report on Northern California’s best roadside attractions and a six-hundred-and-seventeen-word essay on what it’s like to be broke in San Francisco. “It wasn’t a site that immediately would inspire loyalty,” Beers said. “You’d say, ‘I had a good time at that site. I was well-entertained.’ ”

That kind of response, he feels, isn’t enough to bring in the diverse sources of revenue that the Tyee has excelled at finding—crowdfunded contributions from individuals, sponsorships from institutions, and class-attendance fees from those who want to learn from them. Beers believes that, in order for local publications to succeed, their business models need to be linked to their pursuit of big, important stories. Indeed, the Tyee, over the past several years, has won awards for investigative stories about coal exports and jail overcrowding in British Columbia.

This editorially driven approach suggests a welcome departure from the traditional Web business model, which assumes that a news organization will derive its revenue from advertising placed alongside large amounts of entertaining content, then use that money to subsidize the big, important stories. “You must be able to make the case that it’s absolutely essential that you exist—and otherwise the world would not be nearly as happy a place,” Beers said. “Who responds to that message? Not browsers, grazers, and click-bait people. It’s people who have a churning anxiety in their gut that the world isn’t going in the right direction and that journalism is part of the solution.”

Vauhini Vara, the former business editor of newyorker.com, is a contributing writer for the site. She is also an O. Henry Prize-winning fiction writer, with stories published in Tin House, ZYZZYVA, and elsewhere.